also spruce up the presentatIon of home shopping, or of information and interac- tive games. Another asset was Diller's relationships in Washington, particularly with the incoming Clinton Administra- tion. At a time when government would have more say-in whether to impose new strictures on unpopular cable systems that in recent years had raised rates twice as fast as inflation, in regulating how the Baby Bells would participate in the video- information-and-entertainment business, in whether to lift regulations inhibiting networks from plunging into the pro- duction -and -syndication business, in whether to invest in and own the fibre- optic cables-the cable industry needed political friends. "We bet on Bush," Brendan Clouston says. 'We lost." By the end of the summer, Diller and Brian Roberts had spoken so frequently that they had become friends. Roberts proposed that Diller should be cable's programmer. But Diller wasn't inter- ested in being in the service business; he wanted ownership. The cost of buying a cable system was too high. If Comcast was serious abou t Diller, Roberts real- ized late in August, he would have to give up some ownership to make him a partner. But in what? Diller had arranged to be in Philadel- phia, where Comcast has its headquar- ters, on September 28th, and to meet with Brian and Ralph Roberts. They spent the entire morning in a suite at the Four Seasons Hotel, looking for an idea they could all agree on. At one point, Diller mentioned his two visits to QYC, noting what an incredible operation it was. He said that he was thinking of pro- ducing an on-air segment for Diane Von Furstenberg's Silk Assets. Brian Roberts pointed out that QVC had an operating cash flow of a hundred and thirty mil- lion dollars In 1991 and was nearly debt free. He said that each cable operator re- ceived five per cent of QYC's sales in its territory, which gave the operators an incentive to promote QVC and open more channels for it. Diller perked up. For the remaInder of the morning, the three men spoke of nothing but QVC. An idea popped into Ralph Roberts' head-how to make Dil- ler a partner-and he 60 sketched It out He recounted how, five years earlier, he had helped the entrepre- neur Joseph M. Segel start QYC. Segel had launched eighteen businesses, he said, and he enjoyed start-up situations. Now Segel was hoping to leave QYC at the end of the year. "There's an opportu- nity, if it is something of interest," Ralph Roberts remembers telling Diller. QVC, he thought, might be the means by which to marry Diller not just to home shopping but also to the cable industry's appetite for more programming. John Malone was already a part owner, and if Comcast and Malone were allied, as they usually were, they controlled a ma- jority of the stock. Brian Roberts pointed out as an added feature that much of the cable industry had a piece of QYC, for in order to get home shopping launched on their systems most of the other cable companies had been offered stock in QVC. And there was always the prospect that QVC's main competitor, the Home Shopping Network, which Malone would soon own part of: could be merged with QYC. "That was it," Diller recalled later. "After that meeting, I thought I was re- ally on to something. Once I left that day, I thought it would be QYC." Diller and the Robertses talked again at the Atlantic City Cable Show, in mid-October. By then, Malone was in- volved and enthusiastic. It could be a three-way partnership, with QYC as the vehicle for Diller's programming exper- tise. "Having a couple of good partners is as good as doing your own thing," the elder Roberts told Diller Partners would provide deeper pockets and guarantee distribution of whatever programs or products Diller produced. Diller made one more visit to QYC, at 9 A.M. on Saturday, November 7th, for Diane V on Furstenberg's first sale. Surrounded by her silk clothing, she sat beside the host on a small stage in a large brick cavern. Diller stood behind one of eighty telephone operators there and watched the toll-free calls pour in. Diller was awed. At one point, he looked up and saw that Yon Furs- tenberg was chatting with a woman from Brewster, New York. At another point, he looked down G (I THE NEW YORKER, FEBRUARY 22, 1993 and noticed a colored bar on a computer screen surging, to register an increased number of calls. In less than two hours, the computer showed, Yon Furstenberg had sold twenty-nine thousand items to nineteen thousand customers, for a total of a million two hundred thousand dollars. "This was the clincher," Brian Roberts said. "It was the ultimate Nielsen rating. The phones light up. You don't wait till you come into the office tomorrow to find out how you did." And Diller said, "It was the closest link I've ever seen between action and . " reactIon. Diller and Roberts flew to Colorado on a Saturday to spend a day with Malone, and a commitment to pursue a deal was forged between Comcast and Malone's Libertv Media. The deal ulti- .I matelv called for Diller to invest twenty- five million two hundred thousand dol- lars to acquire eight hundred and forty thousand shares (rougbly three per cent) of QVC stock; he would also have an option to buy six million more shares, at an average price of just over thirty dol- lars a share. Diller would become the chief executive officer of QVC; when he exercised his option and his partners sold each other shares, he would own a third of the controlling interest in the company. Peter Barton, the C.E.O. of Liberty, was thrilled. "I think Barry Diller's going to be punching a hole in the sky," he said. The lawyers for the three partners were instructed to move quickly. Diller obviously sees QVC as much more than a shopping network, and so does John Malone. "The shopping busi- ness itself can become a big business," Malone said recently. "How big is the shopping-catalogue business? QYC does a billion dollars a year, and it's just scratching the surface." He believes QYC can be as huge as Walmart. He makes it clear, however, that home shopping is not the ultimate aim of QYC. "It's about whatever we can cook " h " I ' h . I I , I up, e says. t save IC e. t sap at- form for Barry. We just look at Barry as firepower. We're delighted that he's wearing one of our uniforms." A MONTH after the December an- nouncement, Diller began spend- Ing about three days a week on QVC's corporate campus, In West Chester, Pennsylvania. He has a corner office on